$20bn Dangote Refinery Struggles As Marketers Abandon Petrol

Africa’s Richest Man Aliko Dangote has cried out that the Nigerian National Petroleum Company Limited, NNPCL and petroleum marketers are trying to kill his petroleum business after they failed to buy petrol from Dangote Refinery, his company.

The business man made the remark on Tuesday after his meeting with President Bola Ahmed Tinubu alongside Dr. Benedict Okey Oramah,  Chairman of the Board of Directors of the African Export–Import Bank,  Afreximbank, in Aso Rock Presidential villa, Abuja, the nation’s capital.

The development comes amidst complaints of ‘ghost buying’ by petroleum marketers in the country.

Petrol stations owners in the country have complained of serious sales glut citing the high price of the product. A litre of Petrol is now being sold for at least N1,100 after the price was increased at least three times in the last two months.

Sales glut is a situation where there is an excess of a product or service on the market, causing supply to exceed demand.

Analysts insist that the problem Dangote Refinery is facing, as regard sales, may not be unconnected with the decision by petrol consumers to reduce their purchase due to its high cost, while some consumers have embraced other low cost substitutes such as the Compress Natural Gas, CNG.

President Tinubu had during the week urged Nigerians to embrace CNG instead of buying petrol as high cost.

Speaking to state house correspondence after the meeting, Dangote said the NNPCL and local petroleum marketers frustrating his business after they abandoned the petrol produced from the refinery for import.

He explained that the development has forced the company to store 500 million litres unsold petrol stock in its storage facility, saying this is not good for his business.

Dangote owns the $20 billion Petrochemical  Refinery in Lagos which in August this year began the production of petrol also known as Premium Motor Spirit, PMS following months of delay.

The company and the NNPCL had engaged in a serious spat over operational modalities, a situation analysts said hampered the company to postponed its production date several times.

It took the intervention of President Tinubu before the parties agreed to shelve their sword, even though those watching the saga said there is still a deep seated disgreement between them, one of which has to do with the purchase of petrol produced from the refinery.

Recall that the NNPCL had recently dumped its off-taker role which allowed petroleum marketers to purchase the product from Dangote Refinery directly without any intermediary.

But, weeks after the NNPLC said it was no longer performing  the middle man role between Dangote Refinery and marketers, Dangote said nobody is buying from him, stressing that the government-controlled oil company and marketers preferred to import the product into the country.

He said if the situation continues, his business may run into trouble, lamenting that “as we speak today, we have 500 million litres, you know, in our tanks” because the refinery has been abandoned by the NNPCL and marketers.

He debunked an earlier claim by the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, that the refinery lacked the capacity to meet local needs.

Dangote stated that the scarcity being experienced in some parts of the country is no fault of the company, saying  “I’m not in the business of retail” NNPCL and marketers are supposed to fill that gap, he said.

Lamenting his frustration, Dangote said yesterday: “I don’t know if you understand what it means to keep half a billion litres in our tanks; it is costing me money.

“Yes, we have enough supply of crude; we can actually produce much more than 30 million litres every day. At full capacity, we can even supply whatever is being consumed. As we speak today, we have 500 million litres, you know, in our tanks. So, with 500 million litres in our tanks, even if there’s no production from anywhere or no imports, this will take the country more than 12 days, you know, with no imports, with no production, nothing.

“So we are very ready. We are more than ready. And you know, I’m also putting my own name on line by giving Mr President my word that, yes, we will be able to supply the market a minimum of 30 million per day, and we’ll be ramping up production. So, we’re ready. We’re more than ready.

“Well, one thing that you have to understand is that we are producers. I have a refinery. I’m not in the business of retail. If I’m in the business of retail then you hold me responsible.

“But what I’m saying is that the retailers should please come forward and pick, if they don’t, come forward and pick, what do you want me to do? So I don’t expect either NNPC or the marketers to be importing, they should come and pick because we have what they need. And you know, as they remove, I will be pumping.

“I don’t know whether you understand what it takes to keep half a billion litres inside our tank. It’s costing me money every day. If I will be able to collect the naira, I can actually charge somebody 32 per cent in interest. So right now, that’s what I’m losing. And you are talking about 500 million, you know, I mean, we don’t print money. But the issue is that if they come and collect then you will not see any queues in the filling stations.

“We have what it takes for them to come and collect. We are not retailers. We also don’t have trucks to send. We have a factory, we have where they can load. If they come and pick the ones…and they have been doing that with importation. So if they’ve been doing that with importation, if it’s true, they are doing 55 million, I see no reason why they won’t come and collect our own and distribute,” he stated.

The multi-billion dollar refinery had last month stated that it would be forced to export petrol and other products from the refinery if there is no local market for them.